Taipower sells billions in bonds as budget is cut

BY Kevin Chen / Staff reporter

Mon, Oct 15, 2012 - Page 14

State-run Taiwan Power Co (Taipower, 台電) on Friday said it had sold NT$9.7 billion (NT$330.4 million) in unsecured corporate bonds in two tranches via an auction earlier last week.

The company said it auctioned NT$3 billion in seven-year bonds and NT$6.7 billion in 10-year debt. Proceeds from the sale will be used to finance future power generation needs, it said in a statement.

The bond sale came as lawmakers cut Taipower’s electricity purchase budget by 6.66 percent for next year amid concerns that the company is overpaying its suppliers.

On Thursday, the legislature’s Economics Committee slashed NT$9.5 billion from a total of NT$142.68 billion, which Taipower has allocated to purchase electricity from businesses using cogeneration systems and from independent power producers next year.

The budget cut may spark legal concerns between Taipower and its suppliers over their purchase contracts, the Chinese-language United Daily News reported on Friday, citing Taipower chairman Hwang Jung-chiou (黃重球).

Hwang said it could also prompt Taipower to seek other higher-cost power generation options to offset the shortfall, a move that would put more financial pressure on the company, the paper said.

Last month, the company estimated losses this year would reach NT$80 billion and accumulated losses would total more than NT$200 billion.

The bond auction was Taipower’s fifth such sale this year. The company has sold NT$70.95 billion in bonds so far this year, compared with NT$91.7 billion last year and NT$89.2 billion in 2010, company data showed.

Taipower also said it would pay a coupon rate of 1.27 percent on its seven-year bonds and 1.41 percent on its 10-year debt. The company will issue the newly sold bonds by the end of next month and will repay bondholders in a lump sum at maturity, it added in the statement.